Earlier this year the CARES Act suspended the required minimum distributions (RMD) from retirement plans. You will want to adjust your financial planning decisions based on how the CARES Act impacted your RMD this year. Here are some answers to the most commonly asked questions.

How Did the CARES Act Impact Required Minimum Distributions?

The CARES Act waived RMDs for 2020. Anyone that turned 70 ½ in 2019 were not required to take RMDs this year. However, some people may have already taken RMDs by the time the CARES Act passed.

If You Took a RMD, Can You Return It?

Normally these cannot be returned, however the IRS allowed the ability to return the distribution back into the fund. The funds had to be returned by August 31st 2020.

What if I Missed the Deadline to Return the RMD?

If you missed this extension you can still try to minimize your taxes for 2020 using another strategy.

Once every 365 days you can do an IRA to IRA or Roth IRA to Roth IRA rollover. You will still pay taxes on the distribution, but at least you can move the distributed funds to an account where they will grow tax free.

[Related Article: 401K Conversions]

I Took My 1st Required Minimum Distribution in 2019, Can I Waive My RMD?

No, the waiver only applies for RMDs starting in 2020. If your RMD started before 2020 the CARES Act waiver doesn’t apply.

What About Taxes That Were Automatically Taken Out?

Unfortunately, the taxes cannot be returned from RMDs already processed. However, at the end of the year, that will be included in the calculation with other taxes returned by or owed to the IRS.

Financial Planning Strategy for Required Minimum Distributions and the CARES Act

We recommend speaking to a professional to go over your unique needs and decide on a plan of action for a proactive strategy for your Required Minimum Distributions and the CARES Act in Northern Virginia. To get started, contact Argent Bridge Advisors online or call (833) 568-4900 today to meet with one of our experienced financial advisors.